USD/CAD dives to the lowest level since mid-March, closer to 1.3800 mark

• USD/CAD witnessed some aggressive selling on Tuesday amid a broad-based USD weakness.
• Positive crude oil prices underpinned the loonie and contributed to the pair’s steep decline.
• A sustained break below the 1.3865 support further aggravated the intraday bearish pressure.

The USD/CAD pair continued losing ground through the early North American session and tumbled to over two-month lows, around the 1.3815 region in the last hour.

Having struggled to find acceptance above the key 1.4000 psychological mark, the pair came under some intense selling pressure on Tuesday. The steep intraday fall was sponsored by some heavy US dollar selling and a goodish pickup in oil prices.

The latest optimism over a potential COVID-19 vaccine, coupled with hopes that the global economy is moving towards a recovery overshadowed concerns over worsening US-China relations and prompted investors to dump the safe-haven greenback.

Conversely, the commodity-linked currency – the loonie – benefitted from positive crude oil prices. Signs of gradual demand recovery and increasing faith that producers will stick to their promises to cut supply remained supportive of the bullish run in oil prices.

Adding to this, possibilities of some short-term trading stops being triggered below the previous monthly swing lows support, near the 1.3865 region, further seemed to have aggravated the intraday bearish pressure around the USD/CAD pair.

It will now be interesting to see if the pair is able to find any support at lower levels or the ongoing downfall marks a fresh bearish breakdown. This might set the stage for a further near-term depreciating move towards testing sub-1.3700 levels, or 100-day SMA.

Technical levels to watch